Is PIMS the Supply Chain Solution? PIMS Pallet Specification Released, Pallet Management System Takes Key First Steps
PIMS Update: Review of the latest developments in the launch of the PIMS system designed to offer a general pallet industry response to companies desiring a higher quality, managed pool of pallets. Includes comments from Costco about the proposed PIMS pallet standard.

By Chaille BrindleyDate Posted: 12/1/2010

Will the white wood pallet industry develop an answer to pallet rental and nationally managed pallet pools in the United States? There have been a number of efforts to organize a general industry pool in the past. But none of them ever really got off the ground or had enough end user support to be successful. Now, things may be different as the thought of a block pallet mandate by Costco and the growth of pallet rental has created a scenario where an industry cooperative pool just might work this time.

A number of the most progressive pallet companies in the country, including many members of the National Wooden Pallet and Container Association (NWPCA), have come together to develop the Pallet Industry Management System (PIMS), a high quality block pallet managed by independent wood packaging companies collaborating through a national cooperative coalition.

One of the major drivers is an announcement by Costco, a major club store retailer, that all loads must be shipped on approved block pallets starting in January 1, 2011 unless the product does not lend itself to a standard 48x40 block pallet. Costco’s new specification calls for suppliers to use one of the three rental pallet companies (CHEP, PECO, or iGPS) or purpose-built wooden block pallets that have been pre-approved by Costco.

As was explained by the PIMS executive group to the industry, “These narrow new requirements could debilitate many independent wood pallet companies who currently provide pallets to Costco suppliers. A solution for meeting not only the Costco requirements, but many other changing supply chain demands, is the PIMS.”

According to the PIMS executive group, Costco has reviewed the PIMS block pallet specification and stated that “the PIMS specification will be accepted provided the pallet has the official PIMS marking.”

A Costco spokesperson confirmed that the PIMS standard meets its standard. However, Costco has yet to sign on as a participant to the PIMS program although the retailer did not rule out doing this in the future. The Costco spokesperson said that it remains open to working with its suppliers and would certainly not oppose working with PIMS if a large volume of suppliers decided that this startup cooperative is the best way to go.

It appears that Costco does not want to be the driver of PIMS. Yet at the same point, the retailer has not closed the door on it and seems willing to stand by and let suppliers decide if they want to back it. Now is the time for PIMS to develop alliances with pallet users that want an option beside the big three pallet rental companies. If this happens, PIMS could indeed become a strong viable option.

Currently, all three major rental companies are working to gain white wood customers. It appears that PECO has gained the most ground followed by iGPS and then CHEP. Some shippers refuse to participate in traditional pallet rental. These companies are the prime targets for PIMS.

Costco continues to buy some wood block pallets for its own use and could begin acquiring PIMS pallets if it decides to become an official program participant.

Costco remains firm to its January 2011 deadline requiring loads be shipped on block pallets except for specialized/oversized products. Suppliers that ship on non-compliant pallets will face fines. Currently, Costco plans to charge a $50 fee to re-palletize loads onto compliant pallets. Plus, Costco will charge an additional $50 per hour for labor involved in this process. Depending on the number of pallets utilized, costs to shippers could mount quickly.

The warehouse retailer faces a more difficult situation in Canada where only a limited number of block pallets exist. The two dominant pool operators in Canada (CHEP and CPC) both offer stringer pallets. Costco may have to make some deadline concessions in Canada, but the retailer has yet to say if it will do so.

PIMS Standard

The non-profit corporation behind PIMS has officially launched and has developed a pallet specification designed to compete against existing pallet rental options. An interim executive group has been developed to shepherd the launch. When a complete PIMS Board is created it will be comprised of not only pallet manufacturers and recyclers, but also inspection agencies, end users, transporters, and retailers.

PIMS is open to any company willing to comply with program standards as established by the Board of Directors. Unlike private pools, PIMS is a free market system. Participating pallet buyers can purchase from any PIMS provider they wish. This allows them to look for the consistent high-quality PIMS pallet at the best price and finest service.

Participating pallet manufacturers and recyclers must agree to 3rd party inspections to maintain quality standards. The PIMS system includes block pallet manufacturers, recyclers that recover and repair existing PIMS pallets, pallet users, receivers, and the PIMS management organization. A small executive team will oversee the PIMS standard, 3rd party certification, and the logistics operations.